Richard Florida is that rare bird, a best-selling economist. Time magazine
reviewer, Barbara Kiviat (2005), has characterised him as the ‘pop
economist people love to lionize or hate’. She also notes that
in some circles, Florida is ‘written off as a quack’. Another
American reviewer was intrigued by the inclusion of Estonia in the top
ten countries with a high proportion of its workforce belonging to the ‘creative
class’ (Collins 2005). (For the record, the top ten are Ireland,
Belgium, Australia, Netherlands, New Zealand, Estonia, Finland, and Iceland,
in that order. The United States limps along in eleventh place).

Florida’s work revolves around the concept of a Global Creativity
Index (GCI), made up of three constituents—Talent, Technology,
and Tolerance, referred to throughout the book as the three Ts. Although
he has been developing the concept of GCI since 1990 or thereabouts,
he first hit the headlines in 2002 with The Rise of the Creative Class.
His latest work extends the argument to an analysis of ‘the new
global competition for talent’, in which the United States is losing
its competitive edge. First published in 2005, The Flight of the Creative
Class has now been republished in paperback with the inclusion of
an article that originally appeared in The Atlantic Monthly in
October 2005. (More about that article later.)

Technology, in Florida’s usage, refers to technological innovation,
including research and development (R&D), and its central role in
economic growth. Talent denotes the possession of special skills and
creative energy. Tolerance denotes openness to new ideas and willingness
to question the status quo. In Appendix A, Florida tabulates these characteristics
and their contribution to his GCI, presented as an international league
table. The leader is Sweden, which tops the list for talent and tolerance,
and rates highly on technological innovation and R&D. Japan comes
second, although its tolerance rating is relatively low. Finland, which
scores well on all three Ts, comes in third, followed by the United States,
which has a relatively low tolerance rating. Australia occupies twelfth
spot, behind Canada. Although its tolerance rating is high, Australia’s
GCI is dragged down by its low technology index and its low expenditure
on R&D, scores on both of which are the lowest among Florida’s
top fifteen listed nations.

Florida’s work has a long
line of predecessors in both economics and sociology.

League tables such as these have attracted much criticism, and are not
to be taken too seriously. Apart from the fact that the original data
are open to question, such groupings are liable to put too much faith
in statistical evidence. Reality is always more complicated. Nevertheless,
although the rankings are questionable, Florida has a valid point in
stressing that economic performance takes place in a social and political
context, hence his concern with tolerance.

Florida’s work has a long line of predecessors in both economics
and sociology. Since the 1930s several writers have extended the traditional
distinction between primary, secondary, and tertiary industries to emphasise
the fact that the tertiary sector (services, health, education, research,
public administration, finance etcetera) had grown to account for more
than two thirds of economic activity in industrialised countries. In
the 1950s, economists took this analysis further by identifying the contribution
made to economic activity by ‘knowledge’ or ‘information’.
A major contribution to this development was the work of the American
economist Fritz Machlup. In The Production and Distribution of Knowledge
in the United States (Princeton University Press, 1962), Machlup
estimated that the ‘knowledge industry’ accounted for at
least 25 per cent of Gross Domestic Product (GDP). To arrive at this
figure, Machlup had to make some heroic assumptions about the nature
of information and knowledge. Generally speaking, economists and sociologists
use ‘information ‘and ‘communication’ to denote
a cluster of technologies related to the collection, dissemination and
application of specialised knowledge and skills. Marien has identified
eight general situations in which these processes occur: work, commerce,
health, entertainment, education, politics, inter-group relations, and
families (Marien 1985).

Machlup also took entertainment into account, which led to the inclusion
of violin-making in the information economy—an example that attracted
particular derision at the time. His pioneering work was followed by
more sophisticated analyses, which found that Machlup’s figure
was actually an underestimate. A recent study puts the number of ‘knowledge
workers’ at 30 to 35 per cent of the United States’ work
force (Brint 2001).

A by-product of this work by economists was the concept of ‘post-industrial
society’, associated particularly with the writings of the American
sociologist Daniel Bell, who propagated the idea in a series of articles
and books in the 1960s and 1970s. Although the term is less fashionable
than it was, its influence is still considerable, and it can be felt
in the work of Richard Florida. (Bell himself gave up using the adjective ‘post-industrial’ and
his later work talks about the ‘information society’).

For a time, the idea of ‘quaternary
industries’ gained a certain vogue.

Stress on the importance of information as an economic input led to
the separation of the ‘information sector’ from the traditional
tertiary sector. For a time, the idea of ‘quaternary industries’ gained
a certain vogue. Together with post-industrial society, it was utilised
by our own Barry Jones in his bestselling book Sleepers, Wake! (1982).
Jones went one better and invented a ‘quinary’ sector, comprising
domestic and quasi-domestic employment, much of it unpaid, including
provision of meals, accommodation, laundry and house cleaning, child
care, repairs, maintenance and gardening. He argued that, as the two-income
family became the norm, many women had transferred from the domestic
economy to the market economy, performing similar tasks for low or insecure
wages.

Florida himself focuses on the growth of occupations distinguished by
their use of information and specialised knowledge. Using a recent analysis
of the US workforce, and leaving primary industry aside, he identifies
five occupational sectors:

Routine manual tasks, such as assembly line work. Among other things,
these occupations are vulnerable to automation and outsourcing.

Non-routine manual tasks, including personal services such as hairdressing
and house cleaning, as well as certain levels of factory jobs. The
latter are also vulnerable to outsourcing.

Routine cognitive tasks, such as call-centre employment and data
processing. These, too, are vulnerable to outsourcing.

Complex communication, comprising well-paid jobs in design, innovation
and personnel management. These have grown rapidly and seen considerable
salary increases.

Expert thinking, comprising jobs which require creativity and expert
problem solving. Employment in this area has also grown rapidly and
seen considerable salary increases.

During the past quarter of a century, employment growth in advanced
industrialised societies has been concentrated in the two latter employment
categories, which broadly correspond to Florida’s creative class.
But he is also concerned to stress the downside of these developments,
like other social commentators who are alarmed at the growth of inequality.
The fourth and fifth of his occupational groups, he writes, ‘have
sucked up nearly all of the wage and salary gains of the past two decades.
These gains reached record highs in the 1990s, even as the wages of high
school graduates deteriorated’ (p. 32). The result is a growing
class divide that threatens social stability:

Left to its own devices, the highly innovative Creative Economy is
generating concentrated and uneven development on a world scale. To
continue on our current path will likely mean greater regional concentrations
of wealth, mounting economic inequality, growing class divides, and
potentially worsening political tension and unrest within countries
and on a global scale (p. xvi).

Florida regards both Melbourne
and Sydney as centres of his creative class.

Florida reinforces this warning in an article in the Atlantic Monthly,
entitled ‘The world is spiky’. The title is a dig at popular
writers like New York Times columnist, Thomas Friedman, who declared
recently that the world is ‘flat’—that is, that technological
change, especially information technology, and globalisation have created
a worldwide level playing field. On the contrary, Florida contends, what
we see is the emergence of a series of ‘spikes’. Each spike,
displayed on four maps included in the article, represents a concentration
of creative talent. Globalisation means that some spikes are growing
and others are shrinking. Spikes are rising in, among other cities, Tokyo,
Seoul, New York, San Francisco, Toronto, Vancouver, Stockholm, Helsinki,
and Sydney, in that order. The spikes reflect concentrations of Florida’s
three T’s, and he re-emphasises that as concentration increases
and the tallest spikes grow taller, economic and social disparities will
worsen.

Florida, who has lectured in Australia, regards both Melbourne and Sydney
as significant centres of his creative class. Melbourne, he writes, ‘exemplifies
many of my creative economy arguments, bringing together leading fashion
designers, business leaders, and top government officials’ (p.
133). Using data compiled by the National Institute of Economic and Industry
Research, he concludes that Melbourne and Sydney would rank fourth on
his Creativity Index, making them comparable to Boston and Seattle (p.
175).

Florida’s new book is, in part, an updated version of his earlier
work, but the emphasis has shifted to a concern that the United States
is losing its position as the pre-eminent centre of economic creativity—‘on
the verge of losing its competitive edge’ (p. 3). Other nations,
he argues, are positioning themselves to take advantage of American short-sightedness—Canada,
the United Kingdom, Australia, New Zealand, and the Scandinavian countries,
notably Sweden and Finland. All are increasing their efforts to attract
foreign born graduate students, scientists, and entrepreneurs, and according
to Florida, ‘[i]It is the ability of other countries to attract
a greater share of the global talent pool that will alter the competitive
landscape’ (p. xv). Chapter 4, entitled ‘The Closing of America?’,
deplores the growth of intolerance, xenophobia, and anti-intellectualism
in American life, especially since 9/11. One effect of 9/11 has been
an obsession with security. Florida quotes several instances where well-known
scientists and scholars have been denied visas to enter the United States
because they were treated as security risks. He also cites the departure
of leading biologists, frustrated by the Bush administration’s
veto on stem cell research, and asks whether there is a ‘reverse
brain drain’. Will the United States, the long-time beneficiary
of imported talent, become a net exporter?

The expression ‘brain
drain’ was coined by a British tabloid in the 1950s.

The alleged existence of a ‘brain drain’ is, of course,
a familiar source of concern outside the United States, especially in
the United Kingdom, Canada, and Australia. Ironically, the issue of stem
cell research has also been raised in Australia by Professor Ian Frazer,
Australian of the Year in 2006, who achieved fame by developing a vaccine
against the human papilloma virus, one of the main causes of cervical
cancer. He warned that the Commonwealth Government’s veto on stem
cell research, following the American example, would lead to an exodus
of medical researchers. (That situation has since changed, with the passage
of legislation at both federal and state levels to permit therapeutic
cloning. In addition, Professor Frazer now heads a brand-new laboratory
in Brisbane which will enable further research on viruses and vaccines).

The expression ‘brain drain’ was coined by a British tabloid
newspaper in the 1950s, and gained wider respectability when the Royal
Society published a report on the subject in 1963. The outcry was prompted
when several British physicists and engineers took up posts in the United
States. At the time, the Americans had embarked on the space race with
the former Soviet Union, following the first Russian Sputnik in 1957.
A string of academic studies during the 1960s and 1970s critically examined
the idea. French demographer, Alfred Sauvy, summarised the results of
these studies in his major work, General Theory of Population (1973).
He concluded that the so-called drain was largely mythical. The circulation
of scientists and other skilled professionals was a world wide process,
and countries like the United States, United Kingdom, Canada and Australia
were net beneficiaries—the real drain was at the expense of developing
countries. The apparently beneficent policy of granting scholarships
to aspiring scientists from Africa and Asia meant that they often did
not return to their home countries. It has been estimated that 30 per
cent of Africa’s educated professionals live and work outside the
continent—with the United States and the United Kingdom as the
main beneficiaries (Ford 2006).

Sauvy compares the inflow of skilled professionals as between the United
States, Canada and Australia. Between 1962 and 1964, more than 16,000
foreign-trained scientists took up residence in the United States. This
was the period when alarm about the brain drain was at its height in
Britain. Although the United States is obviously the largest importer
of talent, Canada has the highest rate in proportion to population. Canada
is, of course, a large supplier of talent to the United States, and is
correspondingly obsessed by its own brain drain.

Sauvy’s conclusion is supported by recent research in the United
States, cited by Florida, which maintains that ‘brain circulation’ is
a more accurate description of the worldwide movement of skilled professionals
(p. 109). As against this, Florida provides numerous examples to support
his general view that the circulation is no longer in America’s
favour. At the same time that the inflow of creative minds appears to
be decreasing, declining university enrolments in science and technology
mean that shortfalls are not being made up from internal sources. This
situation is compounded by a general atmosphere of hostility to scientific
inquiry, reflected in phenomena such as the rise of ‘creation science’,
the scepticism of the Bush administration towards the evidence of climate
change, and President Bush’s veto on stem cell research, which
has led to prominent researchers leaving the country. (If Florida were
writing today. he would undoubtedly add the spectacle of three of the
Republican candidates for the United States presidency declaring that
they believed in the literal truth of the Biblical account of creation.)

Ironically, similar problems exist in Australia, despite Florida’s
rosy picture of the rise of the creative class in cities like Melbourne
and Sydney. As distinct from his highly aggregated statistics, local
data provide much cause for concern. University statistics indicate that
the proportion of university graduates with degrees in the physical sciences
fell from eight per cent in 1989 to less than three per cent in 2002.
This is a flow-on effect of the reduction in high school enrolments in
physics and chemistry, which have fallen by 50 per cent in the past 25
years. At the same time, there has been a catastrophic reduction in the
proportion of national income spent on higher education, down from 1.2
per cent to 0.8 per cent of GDP since 1995. It is now common knowledge
that this has pushed Australia down to 29th place in the OECD league
table of expenditure on higher education. Federal government expenditure
on universities now accounts for less than half of university revenue,
down from more than 90 per cent in the 1970s. The results have included
much greater reliance on casual staff, reductions in job security, a
relative decline in salary levels, tighter governmental control over
teaching and research budgets, the expansion of managerial authority
at the expense of academic freedom, and the growth of ‘marketing’ activities
by universities in an attempt to gain more finance. The Commonwealth
Government has now reacted, belatedly, to this situation by establishing
its endowment for universities, but the actual amount involved will have
little impact when spread over 38 academic institutions.

The prospects for universities are not improved by allegations of excessive
Left-wing influence in universities and schools. This concern was expressed
by the former Commonwealth minister for education, Brendan Nelson, and
was taken a good deal further by his successor, Julie Bishop, who claimed
that ‘Maoists’ had too much say in the content of school
curricula (Bishop 2006). For his part, the Prime Minister, Mr Howard,
added his voice to these concerns when he told an audience in Sydney
in October 2006 that ‘we should not underestimate the degree to
which the soft Left still holds sway, especially in Australia’s
universities’. Mr Howard did not go on to identify the ‘soft
Left’, but I suspect that it embraces many of my colleagues in
the social sciences and humanities, including the author.

Florida addresses much the same questions in his chapter on ‘The
Closing of America?’ He quotes a number of public utterances of
disapproval, or even despair, about the state of things. One such cri
de coeur attacks the ‘White House’s harsh ignorance and
blatant disregard for scientific inquiry … I’m already exploring
the options with a vacation to Vancouver and research on Sydney. … Soon
this country will shrink small enough so that there’s no room left
for me’ (p. 130). Back home, similar sentiments have been expressed
in an article by prize winning architect, Glen Murcutt: ‘This is
the mood of the culture in Australia today: fearful, ignorant of its
possibilities, afraid of change, always reaching back to the past for
reassurance and comfort instead of looking at the future’ (2004).
We may not be in danger of a brain drain, but we should be apprehensive
about the dangers of brain atrophy.

Sol Encel was professor of sociology at the University of NSW from
1966 to 1990, emeritus professor since 1991. After retiring from teaching,
he joined the Social Policy Research Centre, UNSW, as Honorary Research
Associate. He has written or edited more than 20 books on a wide range
of social and political issues. His latest book, Longevity and
Social Change in Australia (UNSW Press, 2007), examines the implications
of an ageing population.